Welcome to this 25th issue of the Chain Reaction newsletter published on the 4th May 2022. Whilst its issue 25, it is the new type of newsletter as we overhauled what we're doing here to give more of a voice back to our awesome and growing community. This week
What you can expect in this newsletter
In the News
What we're reading/watching
The duality of web3 and crypto... it's becoming more and more apparent. It feels like I've been in it for a long time but I also know it's not been long at all compared to some. It feels like we've come so far yet we're also still so early. On that note, when many get started in this space they should be getting told that this space is not scary despite all the differnet types of tokens and currencies and protocols out there. This is all a bunch of projects that are focused on innovating for the future. Many will fail, but when you look at it through the lense of innovation, it makes it easier to understand why so many are so bullish on the web3 movement and the power that blockchain has to underpin it. #WAGMI
Some further thoughts here: https://twitter.com/CaptDeFi/status/1520583041407918080
Additionally, it was fun to get to represent the Aus DeFi Association on ausbiz (the free online financial news resource) which you can check out here: https://www.ausbiz.com.au/media/how-to-overcome-crypto-fud-fear-uncertainty-and-doubt?videoId=21173
We spoke about the FUD and counterarguments to the various critiques out there.
In the news
The following comes from BetaShares weekly crypto focused newsletter - check it out in full over here for more data analysis and other insights: https://www.betashares.com.au/insights/bitcoin-backed-loans/
Also check out Justin's latest article on Livewire here: https://www.livewiremarkets.com/wires/prices-fall-but-conviction-grows
"Goldman Sachs (GS) has continued to explore new offerings around bitcoin and extended its first bitcoin-backed loan. Goldman’s secured lending facility allowed a borrower to use bitcoin as collateral for a cash loan. Exchanges such as Coinbase already offer this service, however this is a significant step for a major U.S. bank and should accelerate acceptance amongst other major banks. GS traded its first over-the-counter bitcoin options back in March, and this step illustrates GS’ desire to expand its crypto business line. A spokeswoman for the bank said in an email “the deal was interesting to Goldman because of its structure and 24-hour risk management.”
A recent research report conducted by Cryptomonday.de found that $1.3B in digital currencies have been stolen this year, which is already 40% of last year’s $3.2B. Most of the stolen funds derived from decentralized finance (defi) protocol exploits which accounted for 97%. This is significantly higher than previous years where defi hacks accounted for 72% in the first quarter of 2021 and only 30% in the year prior. The exploits are a result of faulty code within defi protocols, where smart contract errors have been used to siphon stolen money. The author of the report explains that ‘because the defi environment is open source, anyone can search for vulnerabilities and errors within a defi project’s codebase.’ This could be considered as one of the biggest drawbacks to the defi sector. In the past, hacks to centralised exchanges were a popular target for hackers, but this has been in steady decline and now only accounts for less than 15% of the stolen crypto.
The latest report released by the Bitcoin Mining Council (BMC) for Q1 2022 shows that the bitcoin mining industry has continued to improve its sustainable energy use and technological efficiency. BMC is a group of 44 Bitcoin mining companies claiming to represent 50% of the global Bitcoin network. Three metrics that are looked at specifically include electricity consumption, technological efficiency, and sustainable power mix. BMC researchers managed to survey roughly 50% of the network’s hashpower, which represented 100.9 exahash per second (EH/s) on March 31, 2022. The voluntary survey indicated that 64.6% of all the participants leveraged electricity with a sustainable power mix. The BMC report highlights “based on this data it is estimated that the global bitcoin mining industry’s sustainable electricity mix is now 58.4% or had increased approximately 59% year-on-year, from Q1 2021 to Q1 2022, making it one of the most sustainable industries globally,”
This week we're showcasing the Katalyst.Earth project which is all about fighting climate change.
Our Regenerative NFT's begin minting June 5th. 50% of proceeds go towards regenerative climate projects. Our goal for 2023 is to build an on-chain financial incentive mechanism where individuals can fund tokenised carbon removal projects and be paid via carbon credit staking in return (currently subject to AFSL approvals). Whitelist sign-ups here https://www.katalyst.earth/nft
This week we asked our community the following question:
What is one area of blockchain/web3/DeFi/NFTs that you would improve if you could and why?
Here's some of the responses from our Discord
on boarding UX - less friction of onboarding = more retail users = more TVL in DeFI + less hostile regulatory action
Right now, Privacy is a luxury on the blockchain. It is easy to track balances and transactions between accounts. However, new projects are coming up that make privacy intrinsic to transactions. This is similar to how SSL is enforced in most internet connections while it used to be a luxury in the past.
In the near future, it should make no difference whether you are transacting Monero, Ethereum or Bitcoin. They should all natively work with zero knowledge proofs.
Another thing I would change is the reliance on centralized choke points like Google Play and Apple Store. We should have a completely decentralized and permissionless Web3 App store.
Making it not feel like such a foreign and scary place where you will lose your investment instantly or get scammed.
Also more explanations by projects in laymen terms because to someone new to crypto, 20% apr sounds super dodgy
from Lizzardz (Elliott):
General knowledge and awareness through dialogue. By normalizing terms like wallets, exchanges, NFTs, utility, staking etc will give people basic fundamentals so that when a conversation arises they don’t feel left out or excluded
I really appreciate in a lot of podcasts when a buzz word comes up they make the talker stop and explain the word in layman’s terms so the listener has an opportunity to keep following rather than get lost in jargon
What we've been watching/listening to
[Video] CoinBureau on the latest IMF report - https://www.youtube.com/watch?v=5zo7oXDeCxI&ab_channel=CoinBureau
[Video] The Defiant on the BAYC, APE, OtherSide and the various silos being built in crypto - https://www.youtube.com/watch?v=jiA5JLky9I4&t=717s&ab_channel=DeFi%2CNFT%26Web3Insights-TheDefiant
[Podcast] The Defiant discuses crypto regulation with academic, Fabian Schar - https://open.spotify.com/episode/4MzbPe0geyRx3CHvo9yEO9
Get in touch
If you would like to dig deeper into why and how is the blockchain relevant to international matters and to get more insights on regulations and Defi knowledge , join us on our Discord: https://discord.com/invite/ZRCTDdsVEF